horns

Dave Ramsey--The Way to Go ! ! !

Recommended Posts

It's stupid to live on 1/2 your salary for three to five years and pay cash for (or at least a huge down payment on) a home when you can just get a mortgage and pay for it three times over. :roll:

Yeah, and in the 10 years it takes to save $250k instead of getting a $250k mortgage, the home has tripled in value so you pay triple anyway! Except now you don't have a few hundred grand in equity and have been renting the last 10 years. Thats an awesome strategy!

Ok, maybe I shouldn't buy that 60 inch plasma for $4k with my Best Buy credit card. Dave got me there. But as far as purchasing a home goes, your friend Dave is smoking crack.

Eddie

Link to post
Share on other sites
Yeah, and in the 10 years it takes to save $250k instead of getting a $250k mortgage, the home has tripled in value so you pay triple anyway! Except now you don't have a few hundred grand in equity and have been renting the last 10 years. Thats an awesome strategy!

Ok, maybe I shouldn't buy that 60 inch plasma for $4k with my Best Buy credit card. Dave got me there. But as far as purchasing a home goes, your friend Dave is smoking crack.

Eddie

I'll grant you that California isn't like most states in the U.S. but homes aren't increasing in value 300% in ten years even in California (according to the U.S. Census Bureau, CA isn't even the state with the fastest growth in mediam home prices)...Ca has had it's share of depressed housing markets as well.

Even if Ca homes were rising that fast in price, the percentage relationship between your salary and housing costs should be approximately the same as they are in the rest of the country...if they aren't then I suppose that's the price you pay for deciding to live where you live.

How smart will a $250,000 mortgage (or any size mortgage) feel if you loose your job because someone in India can do it for $5/hour or you have an accident/get sick and can't work and if you are lucky, you get 1/3 of your income in disability payments?

The point that most people miss is that debt is NEVER without risk; even when you are buying a home (as a lot of people are finding out this past year). Unfortunately, people don't understand that until some life event happens and they start to see that what they thought they owned, they didn't really own at all as they see things repossessed/foreclosed on by the real owners.

Link to post
Share on other sites
Most people can live in a home that doesn't cost a quarter of a million dollars; particularly if it's a first home.

Maybe in TN.

How smart will a $250,000 mortgage (or any size mortgage) feel if you loose your job because someone in India can do it for $5/hour or you have an accident/get sick and can't work and if you are lucky, you get 1/3 of your income in disability payments?

Um. Well. I don't know what to say that. I'm just shaking my head right now. Something tells me you don't have any children, or much responsibility at all for that matter. This feels like an arguement I'm having with my 20 year old brother in law who has never paid rent or a utility bill in his life.

Debt is NEVER without risk; even when you are buying a home (as a lot of people are finding out this past year).

Life is a risk. Quality of life is important to me. I'm not going to drive a clunker. My wife is not going to drive my kids around town in a clunker. She drives a big a$$ SUV. I'm not going to rent for $1500 a month when I can be paying for a home that appreciates every year and builds equity.

Yes, the market sucks right now, but find me one person who bought a home 5 years ago that is upside down on their mortgage right now. The only people that got screwed are the people who were dumb enough to overpay in an inflated market these last few years.

I get the whole debt free thing, but real estate is an entirely different ball game.

Eddie

Link to post
Share on other sites
Um. Well. I don't know what to say that. I'm just shaking my head right now. Something tells me you don't have any children, or much responsibility at all for that matter. This feels like an arguement I'm having with my 20 year old brother in law who has never paid rent or a utility bill in his life.

I've lived on my own since I was 17 and have inherited nothing - and yeah; I guess I'm pretty dumb since I think debt is pretty dumb and I don't buy things I can't afford.

Link to post
Share on other sites

I like the idea of the zero debt, but you still need the credit cards to afford insurance and other things... and since you've all pointed out, life is a gamble, having a credit card is a cushion for when the gamble slaps you upside the head and drains your "safety net".

And no, I'm not talking out the side of my head, I've been there. Unless you are a millionaire several times over, a major life event can wipe out that "safety net savings" and that "six months of living expenses" in a heartbeat. God forbid you experience what I did which wasn't one major catastrophe but four in a row. I had a house nearly half paid for, low interest credit cards with ridiculous limits, about twelve months of living expenses in money market accounts and several CD's with staggered maturity dates for my emergency fund.

My mother fell gravely ill, I got divorced, my car died, then I had a sewer line collapse (250 feet to the main line to be replaced), had to replace the fridge... etc, etc. etc. When it rains it pours doesn't even begin to describe the two years of hell.

Within six months of my mothers illness, I had depleted all the savings, with the divorce we started on the credit limits, add in the car, the home repairs, the appliances and gas to get to work, here I am back in debt and thinking that the whole "let's have an emergency fund" thing that I learned from Ramsey was a joke.

In theory it's a great idea and I'm certainly not suggesting that it is pointless to have that fund, but you know what? SH** happens and unless you are that multi-millionaire, sometimes it lands on you no matter how prepared you are.

Link to post
Share on other sites
I like the idea of the zero debt, but you still need the credit cards to afford insurance and other things... and since you've all pointed out, life is a gamble, having a credit card is a cushion for when the gamble slaps you upside the head and drains your "safety net".

And no, I'm not talking out the side of my head, I've been there. Unless you are a millionaire several times over, a major life event can wipe out that "safety net savings" and that "six months of living expenses" in a heartbeat. God forbid you experience what I did which wasn't one major catastrophe but four in a row. I had a house nearly half paid for, low interest credit cards with ridiculous limits, about twelve months of living expenses in money market accounts and several CD's with staggered maturity dates for my emergency fund.

My mother fell gravely ill, I got divorced, my car died, then I had a sewer line collapse (250 feet to the main line to be replaced), had to replace the fridge... etc, etc. etc. When it rains it pours doesn't even begin to describe the two years of hell.

Within six months of my mothers illness, I had depleted all the savings, with the divorce we started on the credit limits, add in the car, the home repairs, the appliances and gas to get to work, here I am back in debt and thinking that the whole "let's have an emergency fund" thing that I learned from Ramsey was a joke.

In theory it's a great idea and I'm certainly not suggesting that it is pointless to have that fund, but you know what? SH** happens and unless you are that multi-millionaire, sometimes it lands on you no matter how prepared you are.

No.. you don't need to be a multi-millionaire, just access to some OPM! 8-) Have you ever noticed in some of the debt free crowds it's like they always have access to serious other people's money. Like my parents helped us, we moved in with my grandfather while we built our house, etc. It's so annoying I wonder if they even realize what it's like to really be alone with kids or sick parents and not have someone to help them when things happen.

They use OPM and then assume everyone else is in debt because they are buying luxuries and if they would just "cut back" they would be debt free like them!

Link to post
Share on other sites
:mrgreen:

Seriously, watch him sometimes. I swear he just says whatever pops into his head without really thinking it out. It's kind of scary. The odd thing is that he doesn't say anything in any type of convincing manner, but people seem to think he's so brilliant and I just don't get it.

It's because a large segment of the masses are drawn to personalities who act decisively, authoritatively, and sometimes paternally when it comes to complex matters that require actual consideration and thought. Most people don't like to think about things anymore than they absolutely have to. It's easier and more comfortable to defer to someone who seems to be an expert. Evidence: Dr. Phil, Dave Ramsey, numerous pastors, and George W. Bush. (Not to turn this into a political debate--there are a lot of well-informed people who do agree with Bush's policies. But his self-proclaimed "base" could be described as above.)

Link to post
Share on other sites
No.. you don't need to be a multi-millionaire, just access to some OPM! 8-) Have you ever noticed in some of the debt free crowds it's like they always have access to serious other people's money. Like my parents helped us, we moved in with my grandfather while we built our house, etc. It's so annoying I wonder if they even realize what it's like to really be alone with kids or sick parents and not have someone to help them when things happen.

They use OPM and then assume everyone else is in debt because they are buying luxuries and if they would just "cut back" they would be debt free like them!

So because some “debt-free” people used other people’s money to “get there” or at least so you allege, it’s correct to assume that everyone who is debt-free did so?

How many people who live debt free do you actually know? Of those, how many did it with other people’s money as you allege?

Whatever the answers to the above questions, do you really believe your personal experience is a sufficient enough example to reach the conclusion that all or most of those who live debt-free did it the same way?

I suppose that since some people do go deeply into debt and run-up credit cards, etc without ever intending to pay (and usually file bankruptcy) that everybody who has run into trouble did exactly the same thing. :confused:

Link to post
Share on other sites

It’s really Okay if people want to think they need debt or that they can’t live life today without going into debt. You are free to believe anything you want and to be as sophisticated with your money as you wish to be.

Keep in mind, however, that most (not all - I fully understand that bad things happen to people and can overwhelm almost anyone) of the people who come here for help have gotten into trouble believing that they needed to go into debt for something or a lot of things. They believed, or at least they acted, as if life would never throw them a curve and that they would always be able to earn their way out of any financial mess. What is most sad is that many of those same people come here and can’t seem to wait until they can get right back into debt.

Those who think that they need credit/debt prove that advertising works and works very well…while I’m sure many here aren’t old enough to know it, the whole concept of consumer debt is relatively new in our society; for most of our country’s history consumer debt was non-existant. In fact, it was considered shameful for a person to borrow money, even on a home, but especially to borrow money for anything else. Now people who think debt is NOT a good thing are called stupid or worse…my how times change.

At any rate, believe what you want; I’ve been there, done that and found out it doesn’t work and I’ve decided I would rather OWN my lifestyle rather than rent it no matter what more “sophisticated” folks call me.

Link to post
Share on other sites

Now people who think debt is NOT a good thing are called stupid or worse…my how times change.

There's a difference between having debt and having credit. They are not one in the same.

I could be living debt free, but then I wouldn't have the education I have. I chose the education and enjoying life over being debt free and debating whether or not I should spend $1.95 on a cup of coffee every morning.

I pay cash for everything. I use credit cards on occasion to pay for gas, groceries, etc, just to keep the credit history going. In the past I used credit cards to pay for school books, supplies, etc. I don't regret it. I did what I had to do. If I didn't have a credit card, I wouldn't have had the means to purchase a plane ticket to go to Europe when my father passed away. That would have been more stressful to me than the fact that I had a $1,200 credit card bill to address when I returned.

It's just not reasonable to think that life is easy without credit. Have you ever tried to initiate electric service, phones, water, etc without credit? It's near impossible, or involves huge deposits. Car insurance with little to no credit? The pricing is absurd (and I would never, ever drive without insurance in Philadelphia - that certainly wouldn't ensure a debt free life if I were to get into an accident - everything I own would be taken from me, and then some).

I want to enjoy my life, not worry about every penny, what I spend it on, etc. Am I irresponsible with my money? Not even close. I'm 30 years old and have more saved for retirement than many 40+ year olds I work with. I'm very well travelled, and though it was costly, it was worth every cent and I wouldn't trade it in for anything.

My current debt is student loans and a car loan ($18,000 for the car - my old one would have cost $3,000 just to pass state inspection - I think I made the wise choice in purchasing new and not having to worry about paying any repairs for the next 3 years).

Link to post
Share on other sites

Having credit and having debt are not one and the same thing - but credit has a habit of turining into debt (as many, many people here can attest to).

Let me make sure I understand; you can’t get utilities turned on unless you have a lot of credit or debt? What’s the problem with deposits…it’s not as if you “loose” the money? Trust me, if you’ve got six months of living expenses in the bank; other easily accessed savings and good retirement savings; having to have a few hundred dollars tied up in deposits for some period of time isn’t going to give you heard burn.

And you can’t travel without credit - cash doesn’t work anymore???

Choosing to use a credit card for convenience is not wisest choice - every major financial publication will tell you that you spend more when you use plastic rather than cash even if you think you don’t (McDonald’s did start accepting CC as a customer service; they did it because it increased their revenue – in fact, any business that takes CC will tell you that was part of every sales pitch they herd from providers).

However, using credit cards for record keeping, etc. isn’t the major problem; needing to use credit card or taking out loans to buy something because you don’t have the cash (meaning you can’t afford it) is the problem and that especially includes buying a car. Buying a car on credit is about the worst financial decision people make; all the rationalizations notwithstanding and I say that working for a vehicle manufacturer so I have a vested interest in people buying new vehicles.

I suspect I’ve done everything from the standpoint of education and lifestyle that you’ve done, including traveling, and for many years now I’ve done it without using debt or a credit card…So…you can keep telling me all day long it can’t be done but it isn’t going to get very far with me.

As I said, believe what you want.

Link to post
Share on other sites

I am not assuming all of them. I said in "some" of the debt free crowds and in my experience it is the younger Dave Ramsey crowds, especially the religious crowd. They remind me of teenagers who know everything at 18 by the way they talk and are just clueless of what life is really like without help from parents or grandparents.

Link to post
Share on other sites
However, using credit cards for record keeping, etc. isn’t the major problem; needing to use credit card or taking out loans to buy something because you don’t have the cash (meaning you can’t afford it) is the problem and that especially includes buying a car. Buying a car on credit is about the worst financial decision people make; all the rationalizations notwithstanding and I say that working for a vehicle manufacturer so I have a vested interest in people buying new vehicles.

So having a car loan means you can't afford the car? Thats an interesting parabole. My head hurts just thinking about it.

If you ever have a meeting with other "Ramseyians", whatever you do, don't drink the kool aid.

Eddie

Link to post
Share on other sites

Seriously,

Have you tried to fly post 9-11 paying cash? How do you book it? Do you just show up and hope there's a seat? No BS here, I'm in the industry and although you can do it, it's a major PITA. Then expect to have a full cavity while going through TSA.

Now you're going to Europe to a 4-5 star hotel during busy season. Go ahead, try to book a room. Perhaps a hostile is your style, but it just doesn't work that way.

Impossible, no. Practical no way.

Link to post
Share on other sites
Seriously,

Have you tried to fly post 9-11 paying cash? How do you book it? Do you just show up and hope there's a seat? No BS here, I'm in the industry and although you can do it, it's a major PITA. Then expect to have a full cavity while going through TSA.

Now you're going to Europe to a 4-5 star hotel during busy season. Go ahead, try to book a room. Perhaps a hostile is your style, but it just doesn't work that way.

Impossible, no. Practical no way.

I got this one Robert.

If you're going to fly, just save up enough to buy your own plane. I mean, if you have to rent a seat on the plane, then you can't afford to fly.

Then save enough to buy a hotel in Europe.

Eddie

  • Like 1
Link to post
Share on other sites

LMAO with slow eddie. It's hard to argue with exceptionally perfect people that know eveything. What I don't understand what brings these people to these boards in the first place. Must be love. Anyhow, I seriously doubt those that claim they live without credit and have made all major and non major purchases without credit are telling the truth. Even so, some people do not have the time or means to wait for the things they want. It doesn't make them anyless than a person, in my eyes anyway. Credit can enable you to experience things that you might not get to experience in the same way and at the same time. You have to personally weigh the advantages and disadvantages as it pertains to you personally. Finally, it is YOUR life and no body can live it for you.

Georgia Natural Gas will not extend you service without pulling your credit. They did refer me to someone that will not pull credit but offer much higher rates. They explained to me that the rates you get have everything to do with your credit score regardless of the deposit you pay.

Credit is a hard thing to get around not having.

Link to post
Share on other sites
So having a car loan means you can't afford the car? Thats an interesting parabole. My head hurts just thinking about it.

If you ever have a meeting with other "Ramseyians", whatever you do, don't drink the kool aid.

Eddie

If you want to rent your life please feel free to do so...it's Okay with me.

But yes, if you can't write a check for something, especially a car, and you have to use debt to buy it then you can't afford it.

If you can afford payments on a car you can afford to save the same money and buy one with cash...the only thing stopping you is being willing to do it.

Link to post
Share on other sites
I got this one Robert.

If you're going to fly, just save up enough to buy your own plane. I mean, if you have to rent a seat on the plane, then you can't afford to fly.

Then save enough to buy a hotel in Europe.

Eddie

Haven't you people ever heard of a debit card?

I traveled to Amsterdam and Beirut within the last two years and never used a credit card once...it was neither impossible or impractical or difficult.

Link to post
Share on other sites
LMAO with slow eddie. It's hard to argue with exceptionally perfect people that know eveything. What I don't understand what brings these people to these boards in the first place. Must be love. Anyhow, I seriously doubt those that claim they live without credit and have made all major and non major purchases without credit are telling the truth. Even so, some people do not have the time or means to wait for the things they want. It doesn't make them anyless than a person, in my eyes anyway. Credit can enable you to experience things that you might not get to experience in the same way and at the same time. You have to personally weigh the advantages and disadvantages as it pertains to you personally. Finally, it is YOUR life and no body can live it for you.

Georgia Natural Gas will not extend you service without pulling your credit. They did refer me to someone that will not pull credit but offer much higher rates. They explained to me that the rates you get have everything to do with your credit score regardless of the deposit you pay.

Credit is a hard thing to get around not having.

People would take you more seriously if you didn’t put words into other people’s mouths or draw wild conclusions that aren’t based on what has been said (or simply wanting to disagree with people because they don’t accept your arguments in other threads).

No one here has said that anybody else is perfect or that using credit makes them “anyless than a person”.

I’m all for people experiencing things but there is no “right” to experiencing things you don’t have the cash to pay for.

It’s hard to live without credit when the credit industry spends billions of dollars a year convincing us we have to have credit.

It’s hard to live without credit when people start mistaking wants for needs and think that they deserve something they haven’t actually earned the money to pay for.

It’s hard to live without credit when we let the child inside of us convince us that we’ve got to have the “thing” now and can’t wait until we’ve saved enough to buy it.

It’s so hard to live without credit that we’ll use any rationalization at all to justify having it and denigrate anyone who has the gull to suggest that credit isn't a good thing and that paying for what we need and want is better than borrowing money.

The mere existence of a site like this and that people need to come here for help should be a clue that the general widsom about credit and debt isn't very wise.

Link to post
Share on other sites
Of course; it's stupid...every advertisement on TV tells us so!

I'm sorry buddy, but I have no idea what you are trying to say. Because advertisments tell us we should have a house...we buy houses?

It's stupid to live on 1/2 your salary for three to five years and pay cash for (or at least a huge down payment on) a home when you can just get a mortgage and pay for it three times over. :roll:

That's correct. There are plenty of people that can't live on half their salary for 5 years. Here in Schuylkill County Pa, the median income for a family of four is about $45K a year. It's silly to think those folks should "sacrifice" and live on "1/2 their salary" for a few years. They are never going to save $60-$100K. It's arrogant and condescending to think so.

-r

Link to post
Share on other sites
Haven't you people ever heard of a debit card?

I have and will more likely use them more when they offer the same protection as credit cards. I will not even begin to go into the nightmare that I have experienced using my debit card with a major hotel. Took me months to straighen out....

Link to post
Share on other sites
Haven't you people ever heard of a debit card?

I have and will more likely use them more when they offer the same protection as credit cards. I will not even begin to go into the nightmare that I have experienced using my debit card with a major hotel. Took me months to straighen out....

Well heck, if you just had six months of cash on hand it wouldn't be a problem.

-r

Link to post
Share on other sites
Haven't you people ever heard of a debit card?

I have and will more likely use them more when they offer the same protection as credit cards. I will not even begin to go into the nightmare that I have experienced using my debit card with a major hotel. Took me months to straighen out....

Per Visa and MasterCard (Corporate organizations); they do offer the same protection as Visa or MasterCard credit cards and any issuing bank that refuses to meet those requirements are in violation of their agreements with Visa/MasterCard (and likely in violation of a lot of banking and consumer laws as well).

Like anything else, we have to be willing to take them to task if need be.

Link to post
Share on other sites

Well heck, if you just had six months of cash on hand it wouldn't be a problem.

-r

Your right razr. I never thought of that. I might have if life hadn't happened... My apologies for being less than perfect. I'll try for perfectess in my next life, seems this one is hopeless. ; )

Link to post
Share on other sites
I'm sorry buddy, but I have no idea what you are trying to say. Because advertisments tell us we should have a house...we buy houses?

No, I'm talking about the billions of dollars spent asking us what's in our wallet or suggesting we are bad customers if we write a check or, OMG, actually pay cash for something and hold everyone else up (flower shop coming to a screaching halt ring a bell?) or the two, three or four offers for we (and millions of other peole) get every week in the mail offering a new, better Visa or MasterCard.

That's correct. There are plenty of people that can't live on half their salary for 5 years. Here in Schuylkill County Pa, the median income for a family of four is about $45K a year. It's silly to think those folks should "sacrifice" and live on "1/2 their salary" for a few years. They are never going to save $60-$100K. It's arrogant and condescending to think so.-r

I didn't say it was easy or without sacrifice or that everyone, regardless of their circumstances or salary level could do it quickly. Nevertheless, I've know several families who have done it and none of them had perfect circumstances.

I know people don't want to wait - I know people do need a decent home to live in but how about people buying a home when they've got a reasonable down payment and a cash in the bank for emergencies - I'm sure many think that's probably too much to expect too!

Link to post
Share on other sites
Guest
This topic is now closed to further replies.